M'SIA SHOULD AIM FOR A BALANCED BUDGET IN FIVE YEARS, SAYS TAX EXPERT

KUALA LUMPUR, Aug 30 (Bernama) -- A balanced budget is what the government should work towards in five years even though currently an expansionary budget is all right for a developing country like Malaysia, Taxand Malaysia Sdn Bhd's managing director, Dr Veerinderjeet Singh said Saturday.

As a developing nation, Malaysia has to incur a lot more expenditure
compared with perhaps other countries.

"A deficit budget is something that happens but obviously the
government needs to work hard to reach a balanced budget in at least five
years," he said when asked on Malaysia's 4.8 percent budget deficit this
year.

The increase in deficit this year was largely due to the increase in fuel
and food prices.

The government is planning to bring the deficit down to 3.6 percent next
year, which he described as a "challenging task."

Veerinderjeet earlier participated in the 2009 Post-Budget Dialogue session
organised by the Malaysian Economic Association and Standard Chartered Bank
here, Saturday.

On views that as a country with ample resources, Malaysia should have a
surplus budget, he said such a view was correct in theory but it cannot be the
case when the government is providing a wide social safety net.

Obviously when the country is exporting oil, it should be able to show it
in
the national account that there is more income than expenditure, "but if the
government provides a large social safety net and lots of subsidies, this eats
into the income, he pointed out.

On the reduced individual income tax, Veerinderjeet said it was much
welcomed, adding that to some extent the industry did not expect the government
to do so.

The government announced yesterday that the highest marginal tax rate for
individuals be reduced to 27 percent from 28 percent and the marginal tax rate
of 13 percent be reduced to 12 percent.

"It is marginal but something one should be happy about. It caters to the
possibilities of more reduction along the way," he said.